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World's Coffee Growers Seek to Set Minimum Price to Help Poor Farmers
Publié dans La Nouvelle Tribune le 18 - 07 - 2019

Many growers are switching to other crops or abandoning plantations altogether amid lowest prices in over a decade
By
Jeffrey T. Lewis
Can you make an OPEC-style cartel for coffee?
Growers from Brazil, Colombia and more than two dozen other countries will meet in Brazil this week to talk about how to get more money to farmers suffering from the lowest prices on world markets in more than a decade.
A worker harvests coffee on a farm in Alfenas, Minas Gerais state, Brazil, in May. PHOTO: VICTOR MORIYAMA/BLOOMBERG NEWS
Growers are encouraged by the recent advances by the world's two biggest cocoa producers, Cote d'Ivoire and Ghana, in pushing buyers to agree to pay more for the key ingredient in chocolate. Last month, the biggest cocoa buyers agreed to talks to set a minimum price after the two countries suspended sales to protest low prices.
"If they can reach an agreement, why can't we?" said Vanusia Nogueira, executive director of the Brazil Specialty Coffee Association, who will attend the World Coffee Producers Forum meeting in Campinas, Brazil, on Wednesday and Thursday.
Coffee growers admit they may not have such an easy time. Ghana and Cote d'Ivoire were able to get buyers to talk because together the two countries grow more than 60% of the world's cocoa and so are better able to enforce a price floor.
The coffee world is very different. It takes the three biggest arabica-growing countries to reach a similar number for world production for that variety, and there are about 20 more coffee-growing countries than cacao producers. Arabica beans, which are considered to have a milder flavor than the robusta variety of coffee, represent a bit more than 60% of world coffee exports.
A lack of discipline among arabica growers would spell doom for the effort, said Silas Brasileiro, president of Brazil's National Coffee Council, which groups together many of the country's growers.
"We know that the coffee-industry buyers will just seek out the best price. No one will be able to hold on to their coffee" to try to push prices higher, he said.
In May of this year, the Coffee C Futures contract for arabica beans reached a 14-year low of $87.60 on Intercontinental Exchange, or ICE, the market where most of the world's coffee futures are traded.
Growers in many coffee-producing nations say it costs more to produce coffee than the price farmers are getting for their beans at the moment. As a result, many growers are switching to other crops or abandoning plantations altogether to migrate to cities in their countries, or in the case of Central America, to trek to the U.S. border.
The low price is also leaving farmers with less money to spend on care for their trees, on their children's education and even on food, said Juan Esteban Orduz, president of the Colombian Coffee Federation, North America, whose group is part of the effort to raise prices.
"Go to some African and Central American countries, and they're starving," he said.
Last year, coffee-grower groups representing more than 30 countries sent a letter to more than 20 big coffee buyers, including companies like Nestlé SA and Starbucks Corp. to try to convince them to pay more, but they only got "condolence cards" in response, said Ms. Nogueira. "They said, ‘We're sorry to hear about your difficulties,' but that was it."
Helping farmers increase their income is "beyond the scope of any one company's actions," Nestlé said in an email, adding that the company is looking for collective measures to help growers in the face of low arabica prices.
Starbucks said their goal is to make coffee the world's first sustainably sourced agricultural product and that it has invested more than $100 million to "increase the prosperity and resilience" of coffee farmers around the world.
Other ideas suggested by growers include getting ICE to step in if the price falls too much, or changing the rules governing trading of the "C" contract, the benchmark for arabica beans, to filter out speculators that the growers say distort market prices.
Some of the groups that are working together to raise prices say they've already spoken with ICE about the subject, and that officials of the exchange appeared to be sympathetic to their concerns, without going into details.
An ICE spokesman declined to confirm that any talks had been held, saying only that the exchange "constantly engages with market participants to ensure that our futures markets reflect the commercial realities of the underlying products."
The only lasting solution to the growing supply and falling prices in the world is for other coffee-growing countries to boost consumption, Mr. Brasileiro said. Brazilians are already big coffee drinkers, but other producing countries need to encourage their citizens to up their coffee intake.
Madhu Bopanna, owner of a 50-acre coffee farm 150 miles from the Indian city of Bangalore, who also represents other growers and will be attending the Campinas meeting, agrees that Indians need to be encouraged to down more java.
But he thinks the effort to raise the price of coffee can help farmers as well, and even has an optimistic timeline in mind for how long it might take to reach an agreement.
"If strong minds stick together, and everything is planned well, my feeling is that it could be done in 12-18 months," he said.


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